Offset is an accounting concept, which means offsetting each other, that is, offsetting erroneous accounting records so that they are eliminated within equal amounts. To put it simply, it is to make an opposite accounting entry according to the original entry, or make an identical red entry, and eliminate the original account or clear the account that has been recorded.

Accounting backlash is also called a washback, which is one of the methods of accounting adjustment. A washback is to make a negative adjustment for the same amount of the same account in the previous business, so that this amount Business just didn't happen.

A hedge is an investment made specifically to reduce the risk of another investment. It is a way to reduce business risks while still making a profit on your investments. Generally, hedging is to conduct two transactions at the same time that are related to the market, have opposite directions, have equal amounts, and offset profits and losses.

Market correlation means that the market supply and demand relationship that affects the price of two commodities is identical. If the supply and demand relationship changes, it will affect the prices of the two commodities at the same time, and the direction of price change is generally the same. Opposite direction means that the buying and selling directions of two transactions are opposite, so that no matter which direction the price changes, one will always gain and the other will lose.

Extended information:

Offset:

In accounting processing, offsetting means that two factors are the same and the reasons are the same, but due to accounting errors Hedge the two entries formed in order to resolve the original error, find out the reasons for the non-reconciliation and the corresponding accounts, and then perform positive and negative hedging on the wrong accounts, and then do the correct ones, such as "+1" and "-1" are hedging, which equals everything. Then make a correct entry and the account is evened.

Hedge:

Hedge It is most common in the foreign exchange market. The focus is to avoid the risks of single-line trading. The so-called single-line trading means that if you are optimistic about a certain currency, you will do short selling (or short position), and if you are negative about a certain currency, you will do short selling (short position). If the judgment is correct, the profits will naturally be large; but if the judgment is wrong, the losses will also be very large.

The so-called hedging is to buy a foreign currency at the same time as a short position. In addition, another currency must be sold, that is, short selling. Theoretically, short buying of a currency and short selling of a currency must have the same denomination to be considered a true hedging order. Otherwise, the hedging function cannot be achieved if the sizes of the two sides are different.

The so-called hedging settlement means that after traders open a position in the futures market, most of them do not end the transaction through delivery (that is, delivery of spot goods), but through hedging. After buying to open a position, you can release the performance obligation by selling the same futures contract; after selling to open a position, you can release the performance obligation by buying the same futures contract.

Hedge settlement eliminates the need for investors to end futures transactions through delivery, thereby improving the liquidity of the futures market

Baidu Encyclopedia - Offsetting

Baidu Encyclopedia - Hedging